Wall Street opens lower; European markets slide on rate news

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A woman wearing a face mask stands in front of a bank’s electronic board showing the Hong Kong stock index in Hong Kong, Thursday, June 9, 2022. Stocks were mostly weaker in Asia on Thursday as investors were watching for further signs of inflation and crude oil prices hovered above $120 a barrel, adding to price pressures. (AP Photo/Kin Cheung)

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Stocks opened lower on Wall Street on Thursday, putting major indexes in the red for the week. The S&P 500 fell 0.5%, the Dow Jones 0.4% and the Nasdaq 0.8%. European markets were posting steeper declines after the European Central Bank said it would start raising interest rates next month for the first time in more than a decade. This would cause European policymakers to align themselves with other central banks like the US Federal Reserve in moving away from supporting the economy with low interest rates and fighting inflation with higher rates. higher interest.

THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.

NEW YORK (AP) — U.S. markets appeared to be heading for gains on Thursday, with the European Central Bank announcing its first interest rate hike in 11 years.

The bank will make two quarter-point increases, with the second arriving in September.

The surprise move came in reaction to inflation becoming a “major challenge”, with the central bank saying the forces pushing up costs had “broadened and intensified”.

Futures on Dow industrials and the S&P 500 rose more than 0.3%.

European stocks fell in early trading, with the French CAC 40 falling 0.5% by midday while the German DAX fell 0.9%. Britain’s FTSE 100 fell 0.7%.

Markets brace for more inflation data on Friday when the United States releases its latest consumer price index reading. Inflation eased slightly in April after months of relentless increases, but at 8.3% it remained near a four-decade high.

The Federal Reserve is widely expected to raise its main short-term interest rate by half a percentage point at its meeting next week. It would be the second consecutive increase of double the usual amount by the US central bank, and investors are expecting a third in July.

The big concern on Wall Street remains whether the Fed’s decision to aggressively raise interest rates will help soften the impact or possibly push the economy into a recession.

The Fed’s goal is to slow economic growth enough to cushion the impact of inflation. Demand for goods exceeded supply and production capacity for most of the post-pandemic recovery. But investors fear the Fed is going too far too fast in raising rates, pushing the US economy into a recession.

The impact of inflation has worsened since Russia’s invasion of Ukraine, which put increased pressure on energy and food prices.

Oil prices eased slightly on Thursday, with benchmark U.S. crude slipping 21 cents to $121.90 a barrel. He earned $2.70 on Wednesday. Brent crude, the international standard for oil pricing, fell 12 cents to $123.46 a barrel.

The average cost of refueling a family car has topped 100 pounds ($125) for the first time in Britain, as Russia’s war in Ukraine drives up petrol prices.

Benchmarks fell across Asia except in Tokyo, where a weaker yen pushed up issuance from some Japanese exporters.

The Japanese yen recently fell to fresh 20-year lows against the US dollar, a trend the International Monetary Fund and other analysts expect to continue for some time due to higher interest rates. in the United States and Europe, compared to Japan, where long-term interest rates remain close to zero.

The dollar was trading at 133.88 Japanese yen after hitting 134 yen earlier in the day, from 134.20 yen on Wednesday night. The Euro traded at $1.0736, down from $1.0718 previously.

Japan’s benchmark Nikkei 225 rose less than 0.1% to end at 28,246.53. Australia’s S&P/ASX 200 slipped 1.4% to 7,019.70. The South Korean Kospi finished with little change, falling less than 0.1% to 2,625.44. Hong Kong’s Hang Seng fell 0.7% to 21,869.05, while the Shanghai Composite lost 0.8% to 3,238.95.

China reported that its exports jumped 17% year on year earlier in May to $308.3 billion, up from April’s 3.7% growth as coronavirus precautions took a hit. eased in Shanghai and other cities. Imports rose 4% to $229.5 billion, accelerating from the previous month’s 0.7% growth.

China’s trade has been slowed by weak export demand and restrictions imposed to fight epidemics in Shanghai and other cities. Consumer demand for imports has been crushed by rules that have confined millions of families to their homes, sometimes for weeks. But most factories, stores and other businesses in Shanghai, Beijing and other cities have been allowed to reopen.

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